Why is economic growth so slow or non-existent in many third world countries? What policies would you propose to improve the situation?
What will be an ideal response?
Slow-growing third world countries generally lack the necessary preconditions for economic growth: economic freedom, secure property rights, and freely functioning markets. In many of these nations, a corrupt legal system and government means that the rule of law and property rights are absent. In order to increase economic growth in these nations, policies that create economic freedom, secure property rights, and free markets must be adopted. It does not matter if these policies are adopted by a democratic government or by an authoritarian government, the key point is that they are necessary for the nation to grow. Thus, specific policies include creating an efficient legal system that respects the rule of law and enforces property rights and contracts; eliminating government corruption that undermines the rule of law; and, in order to establish free markets, decreasing government bureaucracy and limits to trade, such as high taxes, regulations, and import bans.
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An expansion of the production possibilities frontier is
A) called economic growth. B) proof that scarcity is not a binding constraint. C) a free gift of nature. D) something that has occurred only rarely in history.
Which of the following describes the difference between "scarcity" and "shortage"?
A) There is no difference; either word can be used to describe the situation that exists when there is less of a good or service available than people want. B) There is a shortage of almost everything. Scarcity occurs only if the quantity demanded of a good or service is greater than the quantity supplied at the current market price. C) In the economic sense, almost everything is scarce. A shortage of a good or service occurs when the quantity demanded is greater than the quantity supplied at the current market price. D) In the economic sense, almost everything is scarce. A shortage of a good or service occurs when the quantity demanded is greater than the quantity supplied at the equilibrium price.